£100m for North East SMEs as firms invest in growth

HSBC has allocated £100m of finance for North East SMEs after research showed 2014 could mark a turning point for businesses in the region

Share

Pat Dellow, Area Commercial Director for HSBC

HSBC has allocated £100m of finance for North East SMEs after research showed 2014 could mark a turning point for businesses in the region.

The bank’s Business of Growth report highlighted how firms here were looking to capitalise on the UK’s economic recovery by investing in expansion.

The report predicts a 7.1% increase in fixed investment on physical assets, including machinery, premises and stock, this year.

The figure compares to a pre-recession average annual investment growth of 3.6%. It has also been revised significantly to reflect growing confidence in the recovery; in March 2013, forecasts for fixed investment stood at just 4.7% for 2014.

HSBC says a significant amount of the lending it is providing for SMEs is clearly earmarked to support growth.

In response to this, it is making almost £6bn of new lending available across its regional network, to be distributed by its 52 business centres. A total of £100m has been allocated for the North East.

Pat Dellow, Tyne & Tees area commercial director at HSBC, said: “We’re definitely seeing an increase in business confidence. The local economy is considerably more buoyant, the lending proposals we’re receiving are more robust, and the overall increase in support we’re providing reflects the fact that local businesses are investing in their future.

“We’re seeing companies accessing finance for new plant and machinery, and actively increasing their stock levels. The increase in requests for support with the purchase of premises that have been traditionally leased is another positive indicator that confidence is returning.

“The businesses experiencing the fastest growth are undoubtedly those who are growing their markets outside of the UK, with the oil and gas market particularly performing well. Domestically, we’re seeing an uplift in businesses breaking into new sectors with new concepts, particularly in the renewables sector.

“For those businesses which have strong management teams, and robust forecasts for achieving growth, our message is that the support is there.”

The Business of Growth report analysis identifies that there is a unanimous positive consensus among leading independent forecasters for a substantial pick-up in economic growth in the next two years.

The research comes shortly after the latest Lloyds Bank North East PMI report, which painted a mixed, though generally positive, picture of the region’s fortunes.

Craig McNaughton, Lloyds Bank Commercial Banking area director SME Banking in the North East and Cumbria, said: “The private sector economy across the North East ended the first quarter of the year on a steady growth footing, with both activity and new orders rising strongly.

“However, new business expanded at the weakest pace since last June along with job creation, suggesting that activity growth may weaken in the months ahead.

“Nonetheless, businesses and consumers will be glad to see that inflationary pressures continued to ease across the region.”